25.3.44. When Honda, a Japanese auto maker, built a factory in Ohio, A. It was engaged in foreign direct investment
B. It was engaged in portfolio investment
C. It was engaged in a cross-border acquisition
D. None of the above.

26.3.45. Government controlled investment funds, known as sovereign wealth funds, A. Are playing a less-important role in international finance following the end of the fixed exchange rate era B. Are mostly domiciled in Asian and Middle Eastern countries. C. Are usually are responsible for converting trade surpluses and oil revenues into foreign exchange reserves. D. None of the above

27.3.46. Foreign direct investment (FDI) occursA. when an investor acquires a measure of control of a foreign business B. when there is an acquisition, by a foreign entity in the U.S., of 10 percent or more of the voting sharesof a business C. with sales and purchases of foreign stocks and bonds that do not involve a transfer of control D. a and b

28.5.10. Consider a U.S. importer desiring to purchase merchandise from a Dutch exporter invoiced in euros, at a cost of €512,100. The U.S. importer will contact his U.S. bank (where of course he has an account denominated in U.S. dollars) and inquire about the exchange rate, which the bank quotes as €1.0242/$1.00. The importer accepts this price, so his bank will ____________ the importer's account in the amount of ____________. A. Debit, $500,000

B. Credit, €512,100
C. Credit, $500,000
D. Debit, €512,100

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Spot Rate Quotations
29.5.16. Using the table shown, what is the most current spot exchange rate shown for British pounds? Use a direct quote from a U.S. perspective. A. $1.61 = ≤1.00
B. $1.60 = ≤1.00
C. $1.00 = ≤0.625
D. $1.72 = ≤1.00

30.5.17. Suppose that the current exchange rate is €0.80 = $1.00. The direct quote, from the U.S. perspective is A. €1.00 = $1.25
B. €0.80 = $1.00
C. ≤1.00 = $1.80
D. None of the above

33.5.20. Indirect exchange rate quotations from the U.S. perspective are A. The price of one unit of the foreign currency in terms of the U.S. dollar. B. The price of one U.S. dollar in the foreign currency.

34.5.24. Suppose the spot ask exchange rate, Sa($|≤), is $1.90 = ≤1.00 and the spot bid exchange rate, Sb($|≤), is $1.89 = ≤1.00. If you were to buy $10,000,000 worth of British pounds and then sell them five minutes later, how much of your $10,000,000 would be "eaten" by the bid-ask spread? A. $1,000,000

B. $52,910.05
C. $100,000
D. $52,631.58

35.5.25. If the $/€ bid and ask prices are $1.50/€ and $1.51/€, respectively, the corresponding €/$ bid and ask prices are: A. €0.6667 and €0.6623
B. $1.51 and $1.50
C. €0.6623 and €0.6667
D. cannot be determined with the information given

36.5.26. In conversation, interbank foreign exchange traders use a shorthand abbreviation in expressing spot currency quotations. Consider a $/≤ bid-ask quote of $1.9072-$1.9077. The "big figure", assumed to be known to all traders is: A. 1.9077

38.5.28. In the Interbank market, the standard size of a trade among large banks in the major currencies is: A. For the U.S.-dollar equivalent of $10,000,000,000.
B. For the U.S.-dollar equivalent of $10,000,000.
C. For the U.S.-dollar equivalent of $100,000.
D. For the U.S.-dollar equivalent of...

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A. Fundamental Analysis
1. Balance of Payment Analysis
The following exhibits show that the Euro Area current account surplus has a greater growth rate than that of the US. It is the support for EUR appreciation. In April 19, the ECB published the Euro Area’s Balance of Payment data. The Euro area has 12.1 billion Euro surpluses in current account which is much higher than market expectation.
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...﻿Exchangerates are the value of one currency with respect to another, for the purpose of conversion. They affect investment levels, via the cash rate and values of domestic assets; trades, via prices and the terms of trade (TOT); liabilities, via currency appreciation or depreciation and the valuation effect, and trades. Exchangerates are influenced by government policies in the short term and market forces in the long term. Since the Australian dollar (AUD) was floated in 1983 it has experienced an appreciating trend; however, in recent years the AUD has depreciated from its mining-boom highs due to expansionary monetary policy and weaker economic outlooks.
Prior to the 1980s, Australia’s exchangerate system was under a fixed system, whereby the government determines the value of the currency in terms of a fixed value of another currency or a basket of currencies. In 1983, the exchangerate system began to operate under a floated system in which there is no government intervention and the value of the AUD is determined by market forces. For instance, an increase in supply of AUD depreciates the currency and an increase in demand appreciates the currency. Under a floated system, the exchangerate also correlates with the...

...ExchangeRate Mechanisms Paper - Currency Hedging
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Currency hedging involves deliberately taking on a new risk that offsets an existing one, thereby reducing a businesses' exposure to negative change in exchangerates, interestrates, or commodity pricing (Economists.com, n.d.). "Currency hedging allows a business owner to greatly reduce or eliminate the uncertainties attached to any foreign-currency transaction" (Fraser, 2001). It is impossible to predict the how much a currency will be worth on the exact day that a company will be converting it. With hedging, the uncertainly is gone. Many companies that have international operations are constantly juggling multiple transactions, with payments that are staggered and tied to the swing of a number of currencies.
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If you have ever traveled to a country that does not use U.S currency, then you had to exchange your U.S. dollars into the country’s currency that you have just traveled to. You may notice that your U.S dollars have gotten you more or less of the othercurrency. This means you have just been affected by the exchangerate. If you have 1,000 U.S dollars it does not mean you will have an equal amount in another country’s currency. Exchangerates effects our economy greatly, because we have no choice but to imports goods from other countries, therefore however much of a good our dollar gets us in another country effects us here at home. This is because we could get more or less of a product depending on how much our dollar is worth in comparison to the country’s currency that we are trading with.
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...Question 4a
The currency regime adopted by China is neither fixed nor flexible exchangerate system. China has announced in 2005 the “end of its firm peg against the dollar, instead allowing
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China government manage its currencyrate by buying foreign currencies to increase supply of China currency, therefore lowering its currency value. They also lower the value of its currency by lowering their interest rates.
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...Q1) Using data from the OECD (see Blackboard), compare the most recent PPP exchangerates for the pound, yen and euro with their nominal exchangesrates. What differences do you observe? What accounts for those differences?
PPP exchangerates are the converted currencyrates that equalize the purchasing power of different currencies for a given basket of goods by eliminating the differences in price levels between countries. The following is the comparison of the PPP exchangerates for pound, yen and euro between their nominal exchangerates in 2009, shows that PPP exchangerate of Japan was lower than the nominal exchangerates, whereas United Kingdom and Euro area had higher PPP exchangerates than their nominal exchangerates. There are differentials between PPP exchangerates and market or nominal exchangerates.
|Comparison between PPP exchangerates with nominal exchangerates for pound, yen and euro in 2009 |...

...on CurrencyExchange
When nations buy and sell goods and services with one another, they need to know how much their money is worth in another nation. Exchangerates determine the value of one country’s currency in another country. If a country has a favorable exchangerate with the United States, U.S. dollars will be worth more in that country than if the exchangerate were unfavorable. Exchanges of different currencies take place in the foreign exchange market.
Exchangerates were fixed for the most of the 20th century. The rates were kept constant according to the gold-exchange standard. For each currency there was determined amount of gold which they could be exchanged. This system made foreign exchange markets very slow to respond to changing events.
In 1944, representatives from forty-four western nations met at Bretton Woods, New Hampshire, to establish a fair way of determining worldwide exchangerates. Under the Bretton Woods system, exchangerates between foreign currencies were fixed against the value of the U.S. dollar. The U.S. dollar was fixed at $35 per ounce of gold and all other currencies were expressed in terms of...

...Effect ExchangeRates in Long Run 8
5.2 Exchangerates in short run (A supply and demand Analysis) 10
5.3 Factor that determinant exchangerate 11
5.3.1 Shift the demand for domestic assets 11
5.4 Other Factors that effects exchangerates and its volatility 12
5.4.1 International financial crises 12
5.4.2 Speculators effect 12
5.4.3 Central bank intervention policy 13
5.2 The effects of exchangerate and volatility 14
5.2.1 International trade, export and import 14
5.2.2 Foreign direct investment 15
5.3 The Empirical model 18
6.0 Conclusion 20
References 21
1.0 Abstract
This paper prefers theoretical and empirical evidence that exchangerate has negative impact on international trade or export. In this paper, we focus on export of Australian country. We also, offer a simple model of domestic and foreign asset demand to determine the exchangerate of home country. From this model, we can see the result, either the exchangerate are appreciate or depreciate in value. We use annual data from world databank (2012) over the period 1980 to 2012 for this study. We also use Ordinary Least Square (OLS) to fine the relationship between real exchangerate and export trade. The result shows that export...